Has Commerce Street become too cool for its own good?

It was a brisk night at a recent Final Friday gallery crawl, the air filled with myriad smells from an assortment of food trucks.

Inside the galleries on Commerce Street, artists fraternized with would-be patrons while both hipsters and those who couldn’t tell the difference between a Monet and a Manet sipped wine together.

Once the glitz of Final Friday had faded, Elizabeth Stevenson returned to her third-floor studio at the Fisch Haus and wondered whether it all will last.

In the past couple of decades, the 400 to 500 blocks of South Commerce have been transformed from “a ghost town” where artist John Ernatt joked you could “play Frisbee in the street during the middle of the day” into an arts district with near-100 percent building occupancy.

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But the gentrification has driven up property values – and property taxes – substantially.

Some longtime Commerce Street artists, whose vision essentially paved the way for the modern-day arts district, are growing concerned that, if property taxes continue to increase, they may be priced out of the area, or at least forced to scale back their programming substantially.

It’s a familiar story that has played out in cities across the country, from Philadelphia to Oakland to Miami.

There’s a plan to curtail the effect in Wichita, though.

Together with city leaders, Stevenson, the director of the Fisch Haus, is working on legislation that would create a tax abatement for the Commerce Street Art District, thus guaranteeing that artists won’t be forced to leave the area they pioneered decades ago.

“If they leave, then this just becomes one more kind of fancy-pants neighborhood,” Stevenson said. “It loses its heart. It’s not the art district anymore.”

From warehouse district to chic spot

It’s easy to drive past Commerce on Waterman and miss it.

The street itself has remained largely unchanged for the past 100 years – though the bricks lining the street may have been serviced as recently as World War II.

The brick warehouses on Commerce were originally used to store tons of broom corn, back when Wichita was known as the “Broom Corn Capital of the World” a century ago.

“That’s what was stored here – giant 10-foot stacked bales of broom corn,” said Chris Stong, a local entrepreneur who now owns buildings at 414 and 416 S. Commerce. “Hundreds, thousands of pounds. … That’s why you can walk across the floor of these apartments. They don’t build houses like this – these are industrial warehouses, literally solid as a brick warehouse.”

Over the years, broom corn production was moved to other places and the Commerce Street warehouses were used to store other things.

Suburban flight and the general decline of downtown affected Commerce Street warehouses, but the buildings were consistently used through the years.

“Commerce has been and pretty much always was 100 percent occupied by thriving, independent local businesses,” Stong said. “But your average person walking down the street does not go to an appliance warehouse to buy their (appliance).”

Local entrepreneur John Finn first moved into 430 S. Commerce, now known as Finn Lofts, in 1964 to distribute Amana and Sylvania products. Over time, Finn bought six buildings on Commerce Street, mostly for their parking lots, according to Stevenson.

In the 1990s, Finn began selling his buildings to artists and other creative types, carrying the note so that artists could arrange a sort of lease-to-own contract for buildings on Commerce.

Fisch Haus, 524 S. Commerce, was the first gallery to take advantage of this, and soon others followed suit: Diver Studio, Fiber Studio and the old Go-Away Garage.

To recognize Finn’s generosity, which ultimately created the possibility of a Commerce Street Art District, the lofts at 430 S. Commerce are named for him.

“The story (of Commerce) really is John Finn,” said Ernatt, who is co-owner of the Diver Studio. “That’s going to be real hard to reproduce, because artists just can’t get conventional financing for buildings like this.”

Then, as the district developed as an arts destination, apartments and creative-oriented businesses moved into the area, coinciding with a recent surge in downtown development – forming the eclectic mix of residential, commercial and industrial that today makes up the two-block district.

The SoHo Effect

It’s not a topic many artists like to talk about, but money is an inescapable part of anyone’s life – even artists’.

Stevenson, director of the Fisch Haus, realizes its importance.

“To be a successful artist, I think you have to live within your own temperament, the way you think and believe the world should work, but you also have to understand the way the world actually does work,” she said. “That is something that’s taken me a long time to internalize.”

And money is on some artists’ minds lately, considering the new developments that have altered the makeup of the street. Artists, too, must eat and pay mortgages.

Nearly every property on Commerce Street has increased in value over the past decade – some at a more rapid rate than others – which increases property taxes in the district.

And for Stevenson, it brings to mind an uncomfortable potential future.

It’s called the SoHo Effect.

Named for the gentrification of the New York City district in the 1980s, it’s happened in communities across the country – artists move into abandoned buildings, thus making them trendy. Then pricy development comes to the neighborhood, essentially squeezing out the artists who created the scene.

The straits are not quite as dire in Wichita, however.

Because of Finn, many staples of the Commerce Street Art District are owner-occupied, theoretically preventing against unfair rent increases.

But property taxes are always an uncontrollable variable.

Property taxes at the Finn Lofts have more than quadrupled since the building was opened as residential space in 2010. Its owners can’t pass too much of that on to tenants in the form of rent increases, or they would move, said David Farha, managing partner in Old Town Partners, which undertook the Finn Lofts project.

“There’s only so high you can raise the rent – otherwise, you don’t lease the space,” Farha said. “The market right now on lease rates for apartments can’t handle the amount of taxes that are being placed on these properties.

“Here we are seven years into our project and still it’s not a huge moneymaker or a cash-flowing situation, where it makes sense to be paying that high of taxes.”

Both Farha and Craig Slawson, whose 520Commerce project recently opened, have been as altruistic as possible, Stevenson said, trying to make their developments mesh with the character of the neighborhood.

“They’re respectful – they get it,” Stevenson said. “They know that they would not be selling or renting their apartments for the prices that they’re asking if this wasn’t the art district. ... We’re sort of negotiating these relationships, figuring out how we can all cohabit in a way that is mutually beneficial.”

‘Part of a cultural milieu’

What is it that makes arts districts such attractive venues for developers?

According to Currid, “on a purely symbolic and intangible level, people like to be a part of a cultural milieu.”

For example, people may ostensibly move to Commerce to purchase and interact with visual art, “but they also seek out cultural milieus just to be around them,” because they are perceived as indicative of a high quality of living, according to Currid.

Thus, it makes sense why an arts district like Commerce would attract significant interest from residential developers like Farha and Slawson.

But it also attracts interest from a variety of what Stevenson calls “creative businesses” – a hair salon, a marketing agency, a video studio and now an events venue.

Blake Guthrie, who co-owns The Hudson, a posh events venue in the old Go-Away Garage space at 508 S. Commerce, has been renovating the space for an April opening.

He said he and his wife purchased the building because they loved its architecture, not necessarily because it was in the Commerce Street Art District. They have since fallen in love with the area, he said.

Even though they’ve owned the building for less than a year, they’re already concerned about property taxes. He moved from his previous location near K-96 and Greenwich because the property taxes got too high, he said.

It’s not like we’re a Fortune 500 company.

Blake Guthrie, co-owner of The Hudson

“The last thing anybody wants here is to see people have to go because the taxes are getting too high,” Guthrie said. “There may come a point where we would have to get out of here because it was too high. There’s no saying that that wouldn’t be the case.

“It’s not like we’re a Fortune 500 company. We’re a small business.”

What can be done?

Perhaps Wichita could learn from Kansas City.

At one point, Kansas City’s Crossroads area was “filled with vacant buildings, drug users, hookers, everything,” according to Julie Johnson, a board liaison at the Crossroads Community Association.

In 2007, the Crossroads Arts District persuaded Kansas City’s Planned Industrial Expansion Authority to approve a 10-year tax abatement for the district.

Under the abatement, property taxes were frozen for buildings more than halfway occupied by arts-related businesses.

In the years since, Crossroads has developed as a major tourism attraction in the Kansas City area, and the success of its First Friday gallery crawls inspired a similar event in Wichita, Final Friday.

Last December, the agreement was extended for another 15 years, freezing property taxes at the 2016 assessed value in Crossroads.

“For us, (the tax abatement) supports restaurants, supports businesses,” Johnson said. “Property development is a huge thing. People have just come in and bought up tons of buildings.

“More than anything, the arts create sustained growth.”

More than anything, the arts create sustained growth.

Julie Johnson, Crossroads Community Association board liaison

What Stevenson is proposing will likely be what’s called a PILOT program, or “payment in lieu of tax.”

Under the proposal, businesses would essentially pay however much is fair, based on their expenses and revenue, if the city, county and school district all agree on how much they’re receiving.

It’s not a tax rebate or any sort of predetermined cut.

The exact details have yet to be determined, and legislation is still being drafted. Stevenson hopes to present the idea to lawmakers next year.

“I’ve been talking to several stakeholder-types in the city, and everybody seems to be in an agreement that that seems OK – we could maybe sell that a bit better,” Stevenson said. “Nobody wants to hear the words ‘tax rebate.’”

Look no further than Kansas City for proof that a vital arts district benefits the city, county and other businesses in the area. Independently-owned restaurants, bars and boutiques line Crossroads, in addition to galleries – “You won’t find a franchise clothing store down here,” according to Stephanie Leedy of the Leedy-Voulkos Art Center in Kansas City’s Crossroads.

“The city definitely profits from our willingness to be open, and it’s not like artwork is flying out the door with sales either,” Leedy said. “The city advertises all over about our First Friday, in airline magazines and such. ... We’ve become a real tourist attraction now.”

John D’Angelo, director of the city’s Division of Arts and Cultural Services, helped draft a bill in 2015 that would have granted Wichita’s City Council the ability to create tax incentives for Commerce.

Sedgwick County directed its Statehouse lobbying team to oppose the proposed legislation in 2015.

“Personally, I think this is a bad idea,” Commissioner Richard Ranzau was quoted as saying in a 2016 Wichita Eagle article. “I mean, there are lots of areas and business entities that would like to have special treatment and exemption from property taxes. … I think the best solution in my estimation is to not even create this.”

D’Angelo said he anticipates the revised legislation will allow for tax abatements on a sliding scale.

“The idea is, OK, you may get an 80 percent abatement this year, but it progressively gets less over the next five years,” D’Angelo said. “There are various models, and I won’t say we have the perfect model, by any means.

“It’s bringing down local control. The City Council would take action to establish those art districts and, within those districts, what types of incentives there could be.”

If nothing is done, Stevenson said, Fisch Haus will have to scale back its operations drastically – simply because it costs money to host citywide events nearly every month. Final Friday is a free event, often touted by the city as one of Wichita’s top cultural events.

If property taxes continue to increase, galleries may compensate by quashing those free events.

Stevenson said that would actually undercut the city – fewer people would come downtown, meaning less money spent.

The future of Final Friday hangs in the balance.

“Being a little begrudging of offering us a break to be able to provide these free services to the city, to the county and to the state seems just a little bit shortsighted to me,” Stevenson said. “I would like to be able to have a discussion when everybody starts on the same page and we all understand how these things work, but I’m not sure that discussion could be had just yet.”